The state of Pennsylvania has stepped in to help its capital city Harrisburg avoid a default by advancing next year’s state aid so that the money can be used to make a $3.3m bond interest payment due this week.

On Sunday, Ed Rendell, the governor of Pennsylvania, announced a $4.3m cash transfer and said missing the bond payment was "not an option”. "Harrisburg’s financial future is still very cloudy, and difficult decisions still need to be made to return this city to financial stability,” he said in a statement. "Allowing a missed bond payment, however, would not be a good decision.”

For many months, Harrisburg officials have been debating how to handle its debt burdens and whether the city should follow a handful of other cities that have filed for bankruptcy.Harrisburg’s strains have been closely watched as other US local governments and statesstruggle to close gaps in their budget amid falling tax revenues in the downturn.

Harrisburg has already defaulted on $282m of debt in an incinerator project that the city partially guaranteed. The $3.3m payment due on September 15 is an interest payment on the city’s general obligation bond sold in 1997.

Such municipal debt is sought out by many investors in the $2,800bn US municipal bond market because the GO bonds have a reputation as being safer than many other types of bonds.

Payments take priority over other spending. A default on such a GO bond could have knock-on effects across the municipal bond market, increasing the interest payments that are demanded by investors and leading to a reassessment of default risks.

Politically, there can be incentives for cities not to pay bondholders if it means that services do not have to be cut, although many GO bonds are held by local residents who get tax breaks for buying such debt.

As well as paying bondholders, $850,000 of the money will be used to pay Scott Balice Strategies, a financial management company, to "develop a comprehensive plan for the city’s financial stability”.

Last week, Linda Thompson, Harrisburg’s mayor, proposed "painful steps” to tackle the budget deficit including the closing of a fire station and further layoffs. "There are more difficult decisions to be made in the near future,” Ms Thompson said last week.

Mr Rendell said in Sunday’s statement that bankruptcy should not be an option for Harrisburg until all other options had been exhausted. Sunday’s deal includes a $500,000 loan that Harrisburg will have to repay once its finances improve.

And This from WikiPedia:

Scott Balice Strategies, LLC, or Scott Balice, is a financial advisory firm headquartered in Chicago. The firm was founded in 2003 and is now one of the largest woman-owned financial advisory firms in the nation.[ It is ranked overall as the top financial advisory firm in Illinois, fourth in the Midwest, and 15th in the nation for 2008 according to the annual Thomson Reuters ssurvey

The state of Pennsylvania has stepped in to help its capital city Harrisburg avoid a default by advancing next year’s state aid so that the money can be used to make a $3.3m bond interest payment due this week.

On Sunday, Ed Rendell, the governor of Pennsylvania, announced a $4.3m cash transfer and said missing the bond payment was "not an option”. "Harrisburg’s financial future is still very cloudy, and difficult decisions still need to be made to return this city to financial stability,” he said in a statement. "Allowing a missed bond payment, however, would not be a good decision.”

For many months, Harrisburg officials have been debating how to handle its debt burdens and whether the city should follow a handful of other cities that have filed for bankruptcy.Harrisburg’s strains have been closely watched as other US local governments and statesstruggle to close gaps in their budget amid falling tax revenues in the downturn.

Harrisburg has already defaulted on $282m of debt in an incinerator project that the city partially guaranteed. The $3.3m payment due on September 15 is an interest payment on the city’s general obligation bond sold in 1997.

Such municipal debt is sought out by many investors in the $2,800bn US municipal bond market because the GO bonds have a reputation as being safer than many other types of bonds.

Payments take priority over other spending. A default on such a GO bond could have knock-on effects across the municipal bond market, increasing the interest payments that are demanded by investors and leading to a reassessment of default risks.

Politically, there can be incentives for cities not to pay bondholders if it means that services do not have to be cut, although many GO bonds are held by local residents who get tax breaks for buying such debt.

As well as paying bondholders, $850,000 of the money will be used to pay Scott Balice Strategies, a financial management company, to "develop a comprehensive plan for the city’s financial stability”.

Last week, Linda Thompson, Harrisburg’s mayor, proposed "painful steps” to tackle the budget deficit including the closing of a fire station and further layoffs. "There are more difficult decisions to be made in the near future,” Ms Thompson said last week.

Mr Rendell said in Sunday’s statement that bankruptcy should not be an option for Harrisburg until all other options had been exhausted. Sunday’s deal includes a $500,000 loan that Harrisburg will have to repay once its finances improve.

And This from WikiPedia:

Scott Balice Strategies, LLC, or Scott Balice, is a financial advisory firm headquartered in Chicago. The firm was founded in 2003 and is now one of the largest woman-owned financial advisory firms in the nation.[ It is ranked overall as the top financial advisory firm in Illinois, fourth in the Midwest, and 15th in the nation for 2008 according to the annual Thomson Reuters ssurvey

From what I can tell, Harrisburg is taking very few steps to cut expenses. I don't know what is going on down there, but friends from the area tell me no one is willing to start cutting jobs and programs.

Last week, Linda Thompson, Harrisburg’s mayor, proposed "painful steps” to tackle the budget deficit including the closing of a fire station and further layoffs. "There are more difficult decisions to be made in the near future,” Ms Thompson said last week.

Here we go with closing the Fire Stations again. I guess laying off cops will be next as that is the only tune these overspending cities know. Sucks to be the taxpayer in PA but that is something the voters there can do something about if they have the will to do so.

Originally Posted By 1srelluc:Last week, Linda Thompson, Harrisburg’s mayor, proposed "painful steps” to tackle the budget deficit including the closing of a fire station and further layoffs. "There are more difficult decisions to be made in the near future,” Ms Thompson said last week.

Here we go with closing the Fire Stations again. I guess laying off cops will be next as that is the only tune these overspending cities know. Sucks to be the taxpayer in PA but that is something the voters there can do something about if they have the will to do so.

Police and Fire are the largest expenses in the budget of the city I work in. So, take that for what it is worth.

Originally Posted By 1srelluc:Last week, Linda Thompson, Harrisburg’s mayor, proposed "painful steps” to tackle the budget deficit including the closing of a fire station and further layoffs. "There are more difficult decisions to be made in the near future,” Ms Thompson said last week.

Here we go with closing the Fire Stations again. I guess laying off cops will be next as that is the only tune these overspending cities know. Sucks to be the taxpayer in PA but that is something the voters there can do something about if they have the will to do so.

Shssssh, you are giving away the secret. Govt spending cut threats usually start with Fire/Police eventually move to teachers (never school admin bloodsuckers) and then on to park closings and maybe homeless giveaways. They never seem to get around to bloated, worthless bureauocrats and other worthless funding - including Fire/Police overhead much less some politically connected finance consultancy.

Plus, these payoffs/bailouts inevitably roll up to the feds who can't wait to bail out PA and CA.

Originally Posted By AR-180:
It amazes me that they hire a finance organization when the answer is so obvious to all. Spend less. By hiring a consultant, they get what they really want, and that is a skapegoat.

well, if they are serious about spending less, an outside consultant does provide some cover. any cuts to be made can be explained or defended as being recommended and the ideas not being attached to any particular official.

Originally Posted By 1srelluc:Last week, Linda Thompson, Harrisburg’s mayor, proposed "painful steps” to tackle the budget deficit including the closing of a fire station and further layoffs. "There are more difficult decisions to be made in the near future,” Ms Thompson said last week.

Here we go with closing the Fire Stations again. I guess laying off cops will be next as that is the only tune these overspending cities know. Sucks to be the taxpayer in PA but that is something the voters there can do something about if they have the will to do so.

Naturally, those services that the public ACTUALLY can see are the first cuts. You wouldn't want your back door deals to end....

BUT, don't forget. WE HAVE TOO MANY COPS. The Clinton's passed that law, hiring 100,000 more cops, and even paid for it for 2 years. AFTER THAT, IT BECOMES THE STATES AND CITIES WHO HAVE TO PAY. So the federal .gov makes you hire someone you can't afford.

THEN WHEN THEY GET CUT, PEOPLE LIKE YOU PISS AND MOAN.

THERE ARE TOO MANY COPS.

But I would rather that, than the back door deals each city does to enrich the city council, just like federal pork does nothing but enrich the rep who did it.

YOU'RE BEING PLAYED.

TXL

If the government could create jobs, the USSR would have been the worlds economic powerhouse."The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."